All posts tagged zynga

Zynga Inc. shares are rising after the social-gaming company reported a fourth-quarter loss, but adjusted earnings and revenue that were ahead of Street consensus.

Zynga reported a fourth-quarter loss of $48.6 million, or 6 cents a share, on sales of $311 million. The “adjusted” earnings were 1 cent a share. Street consensus was for an adjusted loss of 3 cents a share, and sales of $250 million.

The revenue figure was down just a hair from a year ago – $311.17 million compared to $311.24 million – and the loss was far narrower, 6 cents compared to $1.22.

The company also forecast first-quarter revenue of $255-$265 million, and a loss between $12-$32 million. Street consensus is for a loss of 6 cents a share (a loss of 1 cent a share, non-GAAP), on sales of $268 million.

Shares were up more than 7% in late trading on heavy volume; now up 5.8% at $2.90. BofA/Merrill’s upgrade today is looking better by the second.

Zynga Inc., one of the most hated social-media stocks these days, just got some much-needed love from Bank of America.

BofA Merrill Lynch earlier Tuesday boosted its rating on Zynga to buy from underperform, hours before the social gaming company is scheduled to release its quarterly results. The firm cited an inexpensive valuation, stabilizing mobile trends and upbeat figures in Facebook Inc.’s annual report as catalysts for its upgrade.

BofA boosted its fourth-quarter bookings estimate by $18 million to $226 million and sees revenue at $280 million, well ahead of the consensus Wall Street estimate. The firm also upped Zynga price target to $3.40 from $2.70.

Not only is BofA’s call a bold one, but the timing also adds more zing to it. Zynga is scheduled to release quarter results after today’s closing bell. Following the release of its first four quarterly reports as a publicly traded company, the stock (on an after-hours trading basis) has risen 14%, fallen 38%, dropped 3% and declined 6%, respectively.

Becoming less reliant on Facebook may ultimately not be such a bad thing for Zynga.

Zynga shares are sliding today in the wake of last night’s disclosure that the social gaming company and Facebook are changing the rules of their relationship. Zynga says it will now be able to host its Web games outside of Facebook’s platform, suggesting less of a reliance on Facebook.

At the onset, that doesn’t sound like such a good development. Shares are down sharply, mainly since the new arrangement leaves the potential for Facebook to produce its own games and become a direct competitor to Zynga.

But analysts are taking the glass-half-full approach about the future prospects for both companies. “Zynga now has an incentive to expand the reach of its most popular social games beyond Facebook and Zynga.com and be able to offer additional payment options, likely resulting in additional payers who are not Facebook users,” says Michael Pachter, an analyst at Wedbush Securities.

The challenge will be to build a company outside of Facebook. Call this one, oh, Zyngaville, and judging by the reaction in the stock market, it’s going to be a lot harder than building a Farmville farm.

George Stahl stopped by the Markets Hub to talk about Zynga’s new challenges.

For more MarketBeat and other streaming markets coverage from The Wall Street Journal, point your mobile browser to wsj.com/marketspulse.

Zynga shares are rising after the company’s earnings report bested Street views, although on a bottom-line basis the company still lost money.

Zynga, which makes online games and was forced earlier this week to slash its staff, reported a loss of $52.7 million, or 7 cents a share, in the third-quarter. On an adjusted basis, it broke even, posting 0 cents a share, down from earnings of 4 cents a share a year ago; the Street consensus was also for break-even results.

Revenue was a bright spot, though, up 3% from a year ago to $316.6 million and better than Street views of $256 million.

The online game maker’s shares tumbled about 17% at one point Friday, to record lows, after the company cut its financial outlook late Thursday. Yet some option traders were betting it is too soon to count out Zynga, with particularly bold investors looking for the shares to recover at least 39% by the end of the year.

The top Zynga bet Friday included a large two-leg trade in December “call” options, which convey the right to buy shares at a set price by a predetermined date. The trader bought 5,000 December $3.50 call options securing the right to buy 500,000 shares at that price, while also buying about 4,000 December $3 calls.

“Buying both options is very bullish speculation,” said Brian Overby, senior options analyst at online brokerage TradeKing. “The trader is paying so little it is like buying a lottery ticket in an all-or-nothing trade.”

The social gaming company cut its full-year earnings and revenue views, citing weakness for some web games, such as The Ville. Zynga also pointed to delays in several new games and said it will have to write down its acquisition of OMGPOP — the company behind Draw Something — for as much as $95 million, about half the purchase price.

Shares dropped 19% to $2.29 in after-hours trading. The stock, which originally priced at $10 in December and peaked in early March at nearly $16, is poised to open on Friday at fresh record lows.

“The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction,” Zynga CEO Mark Pincus said in a statement. “We’re addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities.”

Facebook and Amazon report earnings after the bell. Here are the important numbers and angles you need to keep in mind. All numbers courtesy of Thomson Reuters.

Facebook:

Earnings: Street consensus is for earnings of 12 cents a share on revenue of $1.1 billion.

Keep in Mind: The hype surrounding Facebook’s first quarterly report as a public company was already at fever pitch. But Zynga’s faceplant late Wednesday has further magnified the spotlight on the social-networking company.

Pressure is sky high on Facebook, the most heavily traded IPO of all time, to dispel investor concerns about slowing growth. Analyst estimates are all over the map: The 31 analysts that cover Facebook project EPS anywhere from 9 cents to 29 cents.

Shares have nosedived since the $38 IPO in May amid questions about whether the company’s $100 billion valuation was justified. The stock is down another 6% this afternoon as concerns swirl about how Zynga’s results will impact Facebook’s bottom line.

Investors are worried Facebook may not be able to avoid Zynga’s troubles, especially since Facebook relies on the social-gaming company for a chunk of its revenue.

At least eight Wall Street analysts have slashed their investment ratings on the online-gaming company this morning following Zynga’s surprise second-quarter loss.

Shares are down 40% at $3.05, down about 70% from Zynga’s $10 IPO price last year, and off more than 80% from its March high.

Zynga’s bookings — which depict the sales of all virtual goods — came in at $302 million for the quarter, well below Wall Street’s expectations for more than $344 million. Zynga pegged the miss to game-launch delays and lower expectations for its purchase of OMGPop, the maker of “Draw Something.”

But analysts have said the biggest factor dragging down about 80% of Zynga bookings is the one out of the developer’s control: a simple change to Facebook’s algorithm makes Zynga’s most profitable games harder to find.

“We believe Zynga will have to make a bigger push to diversify its exposure away from Facebook,” Citi analyst Mark Mahaney said in a note to clients.

After tumbling about 40% in the first minute of trading the stock triggered the SEC’s so-called alternative uptick rule, which aims to limit the impact of short sellers on a stock price.

The rule — which kicks in when a stock drops by more than 10% from the prior day’s closing price – is intended to prevent short sellers from knocking an already-beaten down stock even lower.

The rule, known as Regulation SHO, seeks to prevent “potentially manipulative or abusive short selling” and facilitate the ability of bullish investors “to sell first upon such a decline.”

Under the rule, short sales for a lower price than the latest trade are prohibited for the rest of the day and the following day. In other words, each short sale will lead to an uptick in the stock price.

That can’t be a good omen for the social network’s upcoming earnings report, its first as a public company. Investors are taking note: Facebook shares are down 7.4% at $27.16 in after-hours trading.

Here are the comments from Zynga that are sending Facebook shares down (MarketBeat’s emphasis included):

“We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something,” Zynga Founder and CEO Mark Pincus said in the earnings statement.

That’s not exactly what Facebook investors want to hear about 24 hours before the social network reports results. Zinga made up 12% of Facebook’s revenue in 2011, and weakness even in that comparatively small segment of Facebook’s overall earnings could disappoint Wall Street.

Zynga earnings just hit the Tape, they were bad, the outlook was worse, and the stock’s getting clobbered.

Shares were down 8% in late trading before the report even hit the Tape; they’re now down 41% at $2.99.

Facebook shares are down 6.6% as well, as investors worry about the read-through (company reports earnings tomorrow).

Zynga slashed its 2012 outlook. The company now projects adjusted EPS for the year of 4 cents to 9 cents, which is well, well below current Street consensus of 26 cents, according to FactSet.

What’s bad for Facebook shareholders is that Zynga actually cited Facebook for the lowered outlook. Zynga said it’s lowering its outlook for the year, thanks in part to “a more challenging environment on the Facebook platform.”

Zynga reports earnings after the bell. Here are the important numbers and angles you need to keep in mind. All data courtesy of Thomson Reuters.

Zynga:

Earnings: Street consensus is for earnings of 5 cents a share on revenue of $344 million.

Keep in Mind:

Zynga shares have been beaten down lately amid concerns about weakening active user trends, as well as the company’s reliance on Facebook’s platform.

The maker of casual games such as “CityVille” and “Words With Friends” has built most of its success through ties to Facebook. But recently it has taken steps to expand beyond that social network. Last month, it laid out plans to offer a central hub for players of online games, dubbed “Zynga With Friends.” The new offering is intended to connect players of multiple game titles on different websites or mobile devices.

Shares recently dropped 0.5% to $4.89. The stock is down 48% this year. Zynga priced its initial public offering at $10 in December. The stock peaked in early March at nearly $16, but since then has dropped nearly 70%.

“Expectations going into Q2 are VERY low,” says Mark Mahaney, an analyst at Citigroup.

Investors aren’t playing games with Zynga shares, selling the stock for a second-straight day after the social-media company unveiled a slate of new games yesterday that didn’t resonate very much.

Apparently, ChefVille didn’t exactly knock ‘em dead. Zynga shares are down more than 2% today, after falling about 5% yesterday. Even the gamers’ hub the company rolled out, dubbed “Friends With Zynga,” didn’t get much traction with investors.

“Zynga’s media day clearly disappointed investors and we see few near-term catalysts to make the stock work from here,” Macquarie’s Ben Schachter wrote, as Dan Gallagher reports in MarketWatch.

The second half of that quote is the key part. Zynga made a pretty big deal of unveiling these games. Now that the big show didn’t get a standing O, the company – whose fate is closely intertwined with Facebook’s fortunes – is going to have to regroup and redouble its efforts.

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